Changes in anti money laundering law
Recent amendments to the AML/CFT Act regarding obligated institutions and reporting of beneficial ownership information to the Central Register of Beneficial Owners have expanded the catalogue of obligated institutions and introduced specific requirements they have to meet.
Under the Polish Anti Money Laundering and Counter Financing of Terrorism Act, the following have been added to the set of obligated institutions:
- Businesses whose main activity is bookkeeping services, preparation of tax returns, and advice on tax law or customs law
- Businesses dealing in works of art, collectors’ items, antiques and storage of such items, valued at EUR 10,000 or more.
Conditions have also been added that must be met by entities operating in the area of virtual currencies. According to the current wording of the act, such activity may be carried out exclusively after obtaining an entry in the register of virtual currency activities. Entities conducting this activity must meet additional requirements regarding knowledge or experience in the field of virtual currencies (completion of training on legal and practical issues of virtual currencies) or operating in the field of virtual currencies for at least a year, confirmed with appropriate documents.
These entities are required to apply financial security measures in the form of identifying and verifying the client’s identity, assessing the client’s business relationships, and ongoing monitoring. These activities must be documented and the records kept for evidentiary purposes. The entity should make an assessment of the money-laundering risk based on such factors as legal form, place of registration, and the client’s line of business, to tailor the security measures to the given risk.
An important statutory duty of an obligated entity is to implement an internal AML procedure, the detailed scope of which is regulated by the act. Failure to implement the procedure may result in sanctions against the obligated institution in the form of:
- Publication of information about the institution and the nature of its violation of the act
- An injunction prohibiting the institution from taking certain actions
- Withdrawal of a concession or permit, or striking the entity from the register of regulated activities
- Banning the person responsible for the institution’s violation of the act from serving in a management position for a period not exceeding one year
- A fine of up to twice the amount of the benefit gained or loss avoided by the obligated institution as a result of the breach, or, where it is not possible to determine the amount of such benefit or loss, up to the equivalent of EUR 1,000,000.
There is also a new obligation to register activities for companies and trusts and activity in the field of virtual currencies.
According to the act, activities consisting in forming a legal entity, acting as a member of the management board, providing a registered office or address for such an entity, acting as a trustee or a person exercising rights from shares for the benefit of another entity (except for listed companies), as well as activity involving virtual currencies, are regulated activities subject to entry in registers kept by the director of the Katowice Revenue Administration Chamber. This obligation does not apply to attorneys-at-law and advocates. Non-compliance is subject to a fine of up to PLN 100,000.
The deadline for registration of the activity for companies or trusts by an entity that engaged in such activity prior to 31 October 2021 is 30 April 2022.
In a situation where within a capital group, one of the companies performs services referred to above for other companies (e.g. providing a registered office or address, or bookkeeping), that company is also obliged to implement an AML procedure, make a risk assessment, and determine what security measures the company should apply with respect to group companies.
Danuta Pajewska, attorney-at-law, Aleksandra Nowacka, Capital Markets & Financial Institutions practice, Wardyński & Partners
